[Today's Guide]
○China's new energy automobile sales to exceed USA, lithium carbonate price to constantly increase
○Cooperation on nuclear power between China and Africa to speed up, intelligent city to see accelerated investment
○Join In to fully control Wingtech Communication, Shanghai Electric sees injection of core assets from substantial shareholder
○Zhonghe acquires lithium ores through private placement, CORPRO Technology signs big orders for Beidou machine
[SSN Focus]
○China's new energy automobile sales to exceed USA, lithium carbonate price to constantly increase
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Xu Yanhua, deputy secretary general of the China Association of Automobile Manufacturers (CAAM), on Dec. 5 indicated that China's new energy automobile industry gained a favorable development trend, with the sales volume likely to reach 220,000 to 250,000 vehicles this year; there is no doubt that China will exceed the USA to become the largest market of new energy automobile in the world. Based on data released by BAIINFO.COM Inc., domestic offering price of lithium carbonate on Dec. 4 increased by 5,000 yuan per ton to a price higher than 80,000 yuan per ton and set a new historical new high.
Comment: According to observance, the Ministry of Industry and Information Technology and CAAM will issue the automobile production ＆ sales data of last month around 10th each month. Based on the data released by the CAAM last month, the accumulative production of the first ten months in this year recorded 181,200 vehicles, and production of new energy automobile in November is likely to maintain a high growth rate, constantly improving the demands of lithium industrial chain. It is learnt that lithium concentrate mainly comes from overseas salt lakes, and lithium carbonate supply will constantly intensify, as potash fertilizer price is not satisfied and incentives are not enough to expand the production of overseas salt lakes. In terms of companies listed in the A-share market, Sichuan Tianqi Lithium Industries, Inc. (002466.SZ) will become a leading enterprise for lithium resource in the world through acquisition of Talison Lithium; Jiangxi Special Electric Motor Co., Ltd. (002176.SZ) has its lithium carbonate production line of 2,000 ton started; Shenzhen Center Power Tech. Co., Ltd. (002733.SZ) proposes to issue shares through private placement to expand lithium battery business.
[SSN Selection]
○Index breaker system will be implemented from Jan. 1 next year, and suspended trading period after touching the breaker threshold of 5 percent will be shortened to 15 min from the 30 min in the exposure draft.
○Opening and closing time of stock index futures will be adjusted as the same time as the spot market, with soaring or dropping by the daily limit shortened to 7 percent.
○SSN learnt that Ministry of Industry and Information Technology has drafted a three-year scheme on "Internet Manufacturing", which will be officially released in recent days.
○Non-farm payrolls data of the USA released on Dec. 4 was better than market expectation, and three stock indexes all increased by over 2 percent.
○Beijing raised an orange alert for heavy air pollution in advance, with the pollution peak in Dec. 8 and 9.
○Up to Dec. 4, a series of companies under Baoneng Holding (China) Co., Ltd. increased the shareholding of China Vanke Co., Ltd. (000002.SZ) by 4.969 percent again, replacing China Resources (Group) Co. Ltd. to become the substantial shareholder.
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[Industry Information]
○China's independent nuclear power technology exhibited in South Africa, accelerating step for going out
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In the China-Africa Equipment Manufacturing Industry Exhibition held on Dec. 4 of local time, Chinese President Xi Jinping earnestly watched the 3D model of Hualong One, and indicated that we will push the technology to Africa and even the world. Based on reveal of State Power Investment Corporation, its subsidiary State Nuclear Power Technology Company and a nuclear power group of South African signed a management and cooperation agreement on CAP1400 project. According to nuclear power development plan, South Africa will build a nuclear power unit of 9.60 million kilowatt before 2030, and plans to initiate the invitation for bids on nuclear power in this year.
Comment: Driven by the upgraded cooperation between China and Africa, the export of China's nuclear technology Hualong One, a third-generation nuclear reactor design jointly developed by the CNNC and the China General Nuclear Power Group, and CAP1400 might be accelerated. As to listed companies, 90 percent of the butterfly valves and ball valves used by domestic under-construction nuclear power projects are supplied by Jiangsu Shentong Valve Co., Ltd. (002438.SZ), and the equity incentive scheme to be implemented by the company requires a growth rate of no less than 240 percent in terms of net profit in 2016; Guangdong Orient Zirconic Ind Sci and Tech Co., Ltd. (002167.SZ), the substantial shareholder of which is China National Nuclear Corporation, is engaged in the production of nuclear-level sponge zirconium; Zhefu Holding Group Co., Ltd. (002266.SZ) is a leading supplier of the reactor control rod of Hualong One.
○Big Data Technology Conference to open soon, facilitating construction of intelligent city
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The Big Data Technology Conference 2015, a high-profile meeting of the industry, will be convened on Dec. 10 and 12, involving areas including big data market trading, integrated development connected with industrial manufacturing and urban construction. The State Council has launched specific action guidelines to promote the development of big data earlier and requires strengthening the service and supervision to main market players through the application of big data. The interconnection of database information among departments will be achieved via big data technology, thus the construction of intelligent city can be further advanced.
Comment: Nearly 300 cities in China have kicked off the construction of intelligent city, bringing an investment of nearly one trillion yuan in equipment. Segmented industries including intelligent traffic, intelligent medical care and intelligent security will see rapid development. As to listed companies, Anhui Wantong Technology Co., Ltd. (002331.SZ), principally engaged in the informatization of expressway, is now actively developing intelligent traffic; Shenzhen Das Intellitech Co., Ltd. (002421.SZ) acquires business concerning the construction of medical purification system and digital operation. Latest announcement shows that Das Intellitech signs a PPP project contract of 250 million yuan with the People's Hospital of Huairen City, Guizhou Province.
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[Announcement Interpretation]
○Join In to fully control Wingtech Communication to transform to "Internet plus big health"
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Join In (Holding) Co., Ltd. (600745.SH) proposes to acquire 49 percent equities of Wingtech Communication Co., Ltd. with 1,753 million yuan by exchanging its subsidiary engaged in real estate with the restructuring party and paying in cash. Upon completion of the transaction, it will fully control Wingtech Communication. Wingtech Communication always designs products for domestic smartphone brands including Huawei, Xiaomi and Lenovo. Join In indicates that it will withdraw from real estate business in a few years in the future, expand to intelligent home and intelligent medical care areas by resorting to the technologies of Wingtech Communication, and build an "Internet plus big health" platform.
○Shanghai Electric sees injection of core assets from substantial shareholder
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Shanghai Electric Group Company Limited (601727.SH; 02727.HK) plans to exchange the core assets involving nuclear power, power transmission and distribution as well as environmental protection owned by its substantial shareholder. The transaction will cost 6.3 billion yuan, and will be achieved by issuing shares at 10.41 yuan per share through private placement and selling 100 percent equities of Shanghai Heavy Machinery Plant Co., Ltd. In addition, the company also plans to raise a supporting fund of 3.5 billion yuan through private placement at the same offering price. The raised fund will be invested in the R＆D and industrialization projects of main equipment for the nuclear island of Hualong One. The stock price of the company closed at 11.23 yuan per share before trading suspension.
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○Zhonghe acquires lithium ores through private placement
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Zhonghe Co., Ltd. (002070.SZ) plans to acquire 100 percent equities of Sichuan State Lithium Materials Co., Ltd., Blossom Lithium Industrial (Sichuan) Limited and Sichuan Huamin Mineral Resources Co., Ltd., respectively, with 1 billion yuan by issuing shares at 11.53 yuan per share through private placement. It also plans to raise a supporting fund of 900 million yuan through private placement at the same offering price. Dexin Mineral Resources, a subsidiary under State Lithium Materials, owns the mining right of Sichuan Lijiagou Spodumene Mine which is one of the largest spodumene mine with mining right in Asia in terms of proved reserves. The amount of lithium ores controlled by the company will increase largely after the transaction.
○CORPRO Technology signed big orders for Beidou machine
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Chengdu Guoxing Communication Co., Ltd., subsidiary of Chengdu CORPRO Technology Co., Ltd. (300101.SZ), signed procurement contract of Beidou user's machine with a special institutional client with a total amount of 268 million yuan, accounting for 65.86 percent of operating revenue of CORPRO Technology last year. The supply will last from this year to next year.
○WKW Automotive Parts invests in new energy vehicle field
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Beijing WKW Automotive Parts Co., Ltd. (002662.SZ) plans to purchase 48 percent equity of Shenzhen Wuzhoulong Motors Co., Ltd. at 552 million yuan. Wuzhoulong Motors is a high-tech enterprise specialized in the R＆D of new energy passenger vehicles and establishing new energy vehicle and power battery subsidiaries in many regions.
[Financial Reports Express]
○Big shareholders of Zhanjiang Guolian Aquatic Products Co., Ltd. (300094.SZ) propose a 12-for-10 conversion of capital surplus into shares in the company's annual report.
[Weekly Review]
○Never-ending river of stock market not return to beginning
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There is a fable in China that a man carved a mark on gunwale in a moving boat where a sword was lost. The mark did not change but the sword was not there any longer. An ancient Greek proverb says that people cannot walk into the same river twice. The stock market is similar to the rivers in the nature, which will not simply repeat the past path.
Henan Lotus Flower Gourmet Powder Co., Ltd. (600186.SH), which suddenly released an announcement nominating an independent director on Dec. 2, drew the attention from the public quickly. This caused its stock price to rise accordingly. The company announced that it cancelled the independent director nomination on Dec. 3, which aroused uproar in the market. However, its stock price opened with declining by a daily limit of ten percent but rebounded tenaciously. Why did the stock price still stay high when the event returned to the beginning? This was because the disturbance made more investors pay attention to the company's private placement proposal, changing company's name and other plans. The balance between buying and selling was reset at a higher price.
There are many similar companies in the special treatment (ST) sector each year, but their stock prices vary. Cancelling the ST mark is almost a common event at the end of each year, but it is not merely the change of company's names from putting on the market to cancelling it. The effort made by each ST company in order to cancel the mark is a long-term factor influencing the stock prices. For example, the stock prices of Fujian Sunnada Communication Co., Ltd. (002417.SZ), whose controlling stake changed, and Stellar Megaunion Corporation (000892.SZ), which turned to movie and television, are much higher than those before the two companies put on the ST market a year ago.
The price of lithium carbonate once hit the highest 800,000 yuan per ton at the bull market eight years ago. It hiked to 800,000 yuan per ton again, which consecutively increased by 5,000 yuan each time on Dec. 2 and 4. In spite of the same price of 800,000 yuan per ton, the resource reserve, production capacity and downstream demand of the lithium enterprises are incomparable with those of eight years ago. Better profit outlook is expected.
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